Tonight the US November non-farm payrolls report will be released, something that will be closely scrutinised given heightened expectations that the US Federal Reserve will likely increase the Fed funds rate for the first time since June 2006 in just two weeks time.
Here’s the state of play.
- In October the US labour market stunned economists with payrolls increasing by 271,000, the largest since December 2014.
- Over the past 12 months the average monthly increase ticked up to 234,500 from 230,000 in September.
- As a result of the surge in hiring and labour force participation holding steady at 62.4% – a multi-decade low – the unemployment rate tumbled to 5.0%, the lowest level since April 2008.
- The underemployment rate – combining unemployed and underemployed workers – fell to 9.8%, a level last seen in May 2008.
- Signaling tightening labour market conditions, average hourly earnings increase by 0.4%, leaving the annual pace of change at 2.5%, the fastest seen since July 2009.
- In November markets expect payrolls to increase by 200,000, leaving the unemployment rate unchanged at 5.0%.
- Average hourly earnings are tipped to increase by a further 0.2%, something that will see the annual rate of growth slow to 2.3% if realised.
- Given tightening labour market conditions and higher trend in earnings growth, the bar for the US Federal Reserve hiking interest rates appears low.
- On Thursday, FOMC chair Janet Yellen told Congress’s Joint Economic Committee that only 100,000 jobs per month were required to provide employment to new entrants in the workforce, with anything above that helping to “absorb” unemployed or underemployed workers.
The payrolls report will be released at 12.30am AEST Saturday. Business Insider will have full coverage as soon as the data drops.